The ghost of Peter Cummings hung over the British banking industry this morning. Just as it looked as if our banks might be through the worst, along comes a surprise warning from Lloyds that the toxic loan book it inherited from HBOS is, well, how to put this politely - even more toxic than we thought. These are not the esoteric derivatives that tripped up the first wave of banking casualties, but plain old loans to British business. And thanks to the generous activities of Mr Cummings, the Glaswegian formerly in charge of Bank of Scotland's corporate lending division, a staggering amount of these customers are suffering all at once from over-exposure to the property market.

Whether or not the economy's current green seedlings turn into a fully-fledged spring, these property loans are likely to haunt all of us for years to come - not least because the government's insurance scheme will soon have to kick in to pick up the cost of those that turn sour. But instead of drawing a line under this sorry episode, the scheme has left open the key question of just how much pain is heading our way, with much of the detail still to be negotiated.

It is also telling that while much of the rest of corporate Britain is beginning to at least talk about recovery, Lloyds continues to batten down the hatches. Take this choice paragraph from this morning's trading statement for example:

We expect continuing declines in commercial property prices and reducing levels of corporate cash flows as we anticipate a continuing difficult economic outlook. These factors are now leading us to anticipate further corporate defaults during the rest of the year, notably in the commercial real estate portfolios in the UK and Ireland. In particular, the real estate exposures in the legacy HBOS portfolios are more sensitive to a downturn in the economic environment. As a result, corporate impairments in 2009 are expected to be more than 50 per cent higher than in 2008.

All in all, Lloyds (or to be fair, HBOS) has taken the shine off what ought to have been an upbeat day. Better than expected results from Barclays and news that the Bank of England was expanding the scale of its quantitative easing programme should keep the fragile stockmarket rally going for now. But this surprise trading statement from Lloyds is reminder that the bodies are not buried yet.